(Bloomberg) -- Social media influencer @MrZackMorris and several others active in last year’s meme-stock frenzy were charged by federal prosecutors with engaging in a $144 million “pump and dump” scheme.
Edward Constantinescu, known on Twitter as “@MrZackMorris,” and Perry Matlock, whose Twitter handle is “@PJ_Matlock,” were among the defendants charged in an indictment unsealed Tuesday in federal court in Houston.
Constantinescu and Matlock are co-founders of Atlas Trading, a stock-trading forum on the Discord social media platform. Constantinescu has more than 550,000 Twitter followers, according to the US Securities and Exchange Commission, which sued the eight men yesterday. Matlock has 340,000.
The shares they hyped were in little-known companies including GTT Communications Inc., Surface Oncology Inc. and Universe Pharmaceuticals Inc., according to the indictment.
The MrZackMorris account took off during the pandemic-induced stock trading frenzy that spurred a rally in so called meme-stocks like GameStop and AMC. Constantinescu, an immigrant from Romania, attracted thousands of retail traders to his Discord group by pitching his stock trading tips and recommendations.
Such practices took off during the pandemic across social media platforms, both from amateur and professional traders, who sought to cater to the demand for stock analysis. In a Twitter Spaces appearance last year, Constantinescu attributed his success in retail trading to AMC, which was one of the stocks he often promoted.
Also charged were Thomas Cooperman (“Tommy Coops”) Gary Deel (“Mystic Mac”), Mitchell Hennessey (“Hugh Henne”) Stefan Hrvatin (“LadeBackk”), Daniel Knight (“Deity of Dips”) and John Rybarczyk (“Ultra Calls, “The Stock Sniper”).
Lawyers for the eight men couldn’t immediately be located for comment.
According to the government, the defendants falsely told their followers that they planned to hold stocks for the long term, were increasing their positions or aiming to hit higher price targets.
Matlock allegedly told Atlas members in November 2020 that he did “NOT post plays so I can scalp 2 cents on my followers like they want you to believe.”
“I WOULDN’T BE HERE IF I DID THAT. . . . My GOAL is to help THIS group [make] money and help make THIS group successful,” he said, according to the indictment.
In actuality, Matlock and the others were selling their shares at artificially inflated prices, prosecutors claim.
The case is US v. Constantinescu, 22-cr-00612, US District Court, Southern District of Texas (Houston).